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09/12/2016

Juncker breaks cover on Luxleaks

EU Priorities 2020

Juncker breaks cover on Luxleaks

Jean-Claude Juncker [Richter Frank-Jurgen/Flickr]

European Commission President Jean-Claude Juncker made a surprise appearance in front of the Brussels press on Wednesday (12 November) to address the ‘Luxleaks’ scandal, rejecting all accusations of masterminding corporate tax evasion as Prime Minister of Luxembourg and announcing a new EU initiative to clamp down on tax avoidance.

Juncker appeared in the European Commission press room following Wednesday’s weekly meeting of the 28-strong ‘College’ of Commissioners.

His main message related to the the so-called ‘Luxleaks’ investigation, which uncovered “industrial scale” tax evasion in Luxembourg at the time when he was prime minister of the Grand Duchy, leading some European Parliament members to call for his resignation as Commission President.

>> Read: Leftist group gathers MEP signatures to oust Juncker Commission over Luxleaks

Speaking to the press, Juncker claimed the investigation did not reveal anything illegal and that there was no conflict of interest with the “tax rulings” granted to major companies which are now being investigated by the Commission he leads.

The scandal erupted on 5 November, when the International Consortium of Investigative Journalists (ICIJ) published articles based on a review of nearly 28,000 pages of confidential documents, which reveal that more than 300 international companies appear to have channeled hundreds of billions of dollars through Luxembourg to save billions of euros in taxes.

The only mea culpa Juncker made concerned his cancelled appearance at a public event in Brussels on 6 November, one day after the leaks had become public. He said that he decided not to attend because former Commission President Jacques Delors – expected to appear alongside him – was unable to attend for health reasons, and admitted that he now thought this was a mistake.

>> Read: Verhofstadt calls on Juncker to come clean

“The so-called “tax rulings” are a well-established practice in 22 countries of the EU, I am told,” Juncker said, adding that the Commission had often declared the rulings to conform with EU law, provided that the benefits were applied in a non-discriminatory manner.

“Everything that has been done corresponded to national [Luxembourgish] legislation and to relevant international rules,” he stated.

Juncker admitted that the tax ruling led to “feeble” tax yields and that from the interaction of national and international legislation resulted a level of taxation “which doesn’t correspond to the notion of fiscal justice”.

New initiative on tax harmonisation

He also said that the current situation was a result of the lack of fiscal harmonisation in the EU.

“Throughout my life, I have worked for more fiscal harmonisation,” Juncker claimed, announcing he had proposed to the college of commissioners that automatic exchange of tax rulings should be made compulsory.

Pierre Moscovici, the Economic and Financial Affairs Commissioner, had been instructed to draft such a regulation, Juncker said. The matter will be discussed again at the G20 meeting this weekend in Brisbane, Australia, where the Commission will propose that such exchange becomes global, he said.

Pressed on why Europeans should believe that he wants to change the system, when in the past he had been the architect of tax evasion, Juncker repeated that whatever had happened in the past was only a result of lack of tax harmonisation.

Press grilling

Juncker’s appearance at the Commission’s midday press briefing gave Brussels-based journalists an opportunity to grill the Commission President over the Luxleaks affair.

Asked why he did not propose anything of the kind while he was still premier of Luxembourg, Juncker said he could no longer speak for the grand-duchy as its former Prime Minister and it was up to the new Luxembourgish authorities to explain the country’s behaviour.

Pressed as to why he believed that there was no conflict of interest, he said there was a commissioner in charge of state aid, referring to Denmark’s Margrethe Vestager. He said Commission convention dictated that when sensitive issues concerning a particular country were discussed, the Commissioner of the respective nation did not take the floor.

Juncker was asked if he would resign and if he still believed he represented the credible face of Europe before its 500 million citizens, he told the interlocutor: “I’m as suitable as you are.”

Asked by EurActiv if he believed that he would still have been appointed as candidate – the so-called ‘spitzenkandidat’ – of his political group for the Commission’s top job, if the facts of the scandal had been known, Juncker confidently asserted “Yes”. 

Juncker was putting in another surprise appearance in the Parliament at time of publication.

Further Reading